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As the Brexit negotiation debacle drags on, with no clarity on the final deal yet emerging, the leveraged finance markets have spent the year plagued by uncertainty.

Any ambiguity is typically a headwind for markets, but the consequences in this case have tended to differ between leveraged loans — which have seen robust volumes from U.K. borrowers and no discernible spike in pricing — and the bond market, where volumes have fallen and new-issue yields have shot up.

“It is very hard to price risk with no clarity,” comments a head of EMEA leveraged finance. “Sterling volumes in high-yield are down 40–50% this year. The marginal investor sets the price, so it has gotten more expensive. And while there has been some success on individual deals, volumes are down in the main.”

Indeed, high-yield issuance from U.K.-domiciled companies is at its lowest level since the Brexit referendum took place in 2016, currently running at $15.5 billion-equivalent in the year to date, versus $15.15 billion in all of 2016. Last year, this volume was up at $27.4 billion as companies looked to get deals done before the Brexit noise grew louder this year.

Sterling-denominated high-yield supply has also collapsed, falling to €4.5 billion-equivalent so far this year, versus €12.6 billion in all of last year. The total is only a touch lower than the €4.7 billion seen in FY16 however, which itself was the lowest full-year tally on this measure since €4.2 billion was recorded in 2010. Note, last year’s volume is a record-high since LCD began tracking the market in 2005. – Luke Millar

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